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Form 8938 Explained: FATCA Foreign Asset Reporting

By The Ledgerism Editorial Team · The Ledgerism Brief Editorial Team produces original, methodology-disclosed accounting and tax research—data trackers, databases, and reference guides built to be the most-cited source in the field. Every figure is verified against primary sources including FASB, the IRS, the PCAOB, NASBA, the AICPA, and state boards of accountancy.

Form 8938, Statement of Specified Foreign Financial Assets, is the IRS form that certain U.S. taxpayers attach to their annual return to report foreign financial assets under FATCA (the Foreign Account Tax Compliance Act, enacted in 2010). You file it when the total value of your specified foreign financial assets crosses a threshold set by your filing status and where you live. It is separate from the FBAR, and many people must file both.

This form does not create a new tax. It is an information return. The tax consequences come from the penalties for skipping it, which start at $10,000 even when no tax was owed on the assets.

Who has to file Form 8938

You file Form 8938 if you are a “specified person” who has an interest in specified foreign financial assets and the total value exceeds your applicable threshold. Specified persons include U.S. citizens, resident aliens for any part of the year, certain nonresident aliens who elect to be treated as residents, and bona fide residents of American Samoa or Puerto Rico. Specified domestic entities (certain closely held corporations, partnerships, and trusts holding foreign assets) can also be caught.

The filing test has two parts, and both must be met: you are a specified person, and your specified foreign financial assets exceed the threshold. A U.S. citizen living in Ohio with a $12,000 foreign bank account is a specified person but sits below the $50,000 threshold, so no Form 8938 is due (though an FBAR may be, since that threshold is $10,000).

Form 8938 filing thresholds by residency and filing status

The thresholds depend on whether you live in the United States or abroad and on your filing status. Two numbers apply to each category: a value on the last day of the tax year, and a higher value reached at any point during the year. You file if you cross either one. The IRS has held these figures steady for years, and they apply to the 2025 tax year filed in 2026.

To use the “living abroad” thresholds, you generally must meet the bona fide residence test or the physical presence test (present in a foreign country at least 330 full days in a 12-month period), the same tests used for the foreign earned income exclusion. If you do not meet either, you use the lower domestic thresholds even while overseas.

Married filing jointly means one combined Form 8938 covers both spouses. Married filing separately means each spouse who crosses the threshold files a separate form, and jointly owned assets are counted in full by each spouse for the threshold test.

What counts as a specified foreign financial asset

A specified foreign financial asset is either a financial account held at a foreign financial institution, or a foreign asset held for investment that is not in an account. The second category is broad and catches holdings the FBAR ignores. You report the maximum value of each asset during the year, converted to U.S. dollars using the Treasury year-end exchange rate.

Assets that count include:

• Financial accounts (checking, savings, brokerage, custodial) at a foreign financial institution
• Foreign stock or securities held directly, not through a U.S. broker
• Interests in a foreign partnership, foreign hedge fund, or foreign private equity fund
• Foreign-issued life insurance or annuity contracts with a cash value
• A financial instrument or contract with a non-U.S. issuer or counterparty
• An interest in a foreign estate or foreign trust (once you know about it)

Assets that do not count include:

• Financial accounts held at a U.S. domestic institution
• Foreign branches of U.S. financial institutions, and U.S. branches of foreign institutions
• Foreign real estate held directly (a rental apartment in Lisbon owned in your name)
• Foreign real property held through a foreign entity (only the entity interest is reported, not the property)
• Directly held tangible property: foreign currency, precious metals, art, jewelry, cars
• Assets already reported on another form, such as Form 5471, 3520, or 8621, if you note them on Form 8938

Foreign real estate is the point people miss most. A directly owned villa abroad is not a specified foreign financial asset. But if you hold that villa through a foreign corporation or LLC, the interest in the entity is reportable. If you own foreign corporation shares that trigger Form 5471 for U.S. persons with foreign corporation interests, you can reference that form on Form 8938 rather than duplicate the detail.

FBAR vs Form 8938: a side-by-side comparison

The FBAR (FinCEN Form 114) and Form 8938 overlap but are not interchangeable. Filing one does not satisfy the other. The FBAR goes to the Financial Crimes Enforcement Network (FinCEN) with a $10,000 aggregate threshold; Form 8938 goes to the IRS with your tax return at higher thresholds. Many U.S. persons with foreign accounts file both every year.

One practical difference: the FBAR captures accounts where you have only signature authority (an account you can sign on but do not own), while Form 8938 requires an actual financial interest. A treasurer who signs on an employer’s foreign account may owe an FBAR but not a Form 8938.

Penalties for not filing Form 8938

The failure-to-file penalty starts at $10,000. If the IRS mails you a notice and you still do not file, an additional $10,000 applies for each 30-day period (or part of one) after 90 days, up to an added $50,000, for a maximum of $60,000 per return. The penalty can apply even if you owed no tax on the underlying assets.

Two further exposures raise the stakes:

1. Accuracy-related penalty. An understatement of tax tied to an undisclosed specified foreign financial asset can carry a 40% penalty on the underpayment under IRC section 6662(j), double the usual 20% rate.
2. Extended statute of limitations. Failing to report can keep the assessment window open. If you omit more than $5,000 of income from a specified foreign financial asset, the IRS generally has 6 years to assess, and the clock may not start at all on items tied to an unfiled Form 8938.

A reasonable cause defense can waive the penalty, but you must show a genuine, documented reason, not that you did not know the form existed. Taxpayers who are behind often use the IRS Streamlined Filing Compliance Procedures to catch up, which can reduce or remove penalties for non-willful conduct. Anyone facing this may want to weigh whether to bring in a CPA, EA, or tax attorney depending on the credentials and scope needed.

How Form 8938 fits your return

Form 8938 attaches to your Form 1040 and follows the same deadline, including extensions. If you already file a personal tax extension on Form 4868, your Form 8938 deadline moves with it to October 15. The form has parts for foreign deposit and custodial accounts, other foreign assets, a summary of tax items connected to those assets, and a section noting assets reported on other forms so you avoid double reporting.

Values are reported in U.S. dollars. Use the U.S. Treasury Bureau of the Fiscal Service year-end exchange rate for the last day of the tax year, or a published rate if Treasury has none for that currency. Keep account statements and valuation records; the burden to prove values and thresholds sits with you.

Frequently asked questions

Do I have to file both the FBAR and Form 8938?

Often yes. They are separate requirements with different agencies and thresholds. If your foreign accounts exceed $10,000 in aggregate at any time, you file the FBAR with FinCEN. If your specified foreign financial assets also exceed your Form 8938 threshold, you file that with the IRS too. Filing one does not satisfy the other, and the assets reported can differ.

Is foreign real estate reported on Form 8938?

Directly owned foreign real estate is not a specified foreign financial asset, so a home or rental you hold in your own name abroad is not reported. If you hold that property through a foreign corporation, partnership, or trust, the interest in that entity is reportable, though not the property itself. Foreign currency and precious metals held directly are also excluded.

What exchange rate do I use for Form 8938?

Convert each asset’s maximum value to U.S. dollars using the U.S. Treasury Bureau of the Fiscal Service exchange rate for the last day of the tax year. If Treasury publishes no rate for a currency, you may use another publicly available rate, applied consistently. Use the year-end rate even for the “highest value during the year” figure.

What is the penalty if I never file Form 8938?

The base penalty is $10,000. After IRS notice, an added $10,000 applies per 30-day period up to $50,000 more, for a $60,000 maximum per return. Related income understatements can draw a 40% accuracy penalty, and the assessment statute can stay open longer. The penalty may apply even when no tax was due on the assets.

Can I fix a missed Form 8938 without penalties?

In many cases, yes, if the failure was non-willful. The IRS Streamlined Filing Compliance Procedures let eligible taxpayers file delinquent Form 8938s and amended returns with reduced or no penalties. A documented reasonable cause statement can also waive the penalty. The right path depends on whether the conduct was willful, so professional advice is common here.

Does having only signature authority over a foreign account require Form 8938?

No. Form 8938 requires a financial interest in the asset, not just the ability to sign on it. Someone with signature authority over an employer’s foreign account, but no ownership, generally does not report it on Form 8938. That same account may still require an FBAR, since the FBAR does capture signature-authority-only accounts.

Reviewed by The Ledgerism Editorial Team. Last reviewed: July 2026.

Related guides

• Form 3520
• Form 5471 Explained
• FBAR (FinCEN 114)